Korean Air maintains capacity discipline to narrow 2Q2014 loss

Top level figures at Korean Air show flat traffic and revenue in 2Q2014 being paired with lower costs to reduce operating losses while currency gains bring large improvements to net profits. But these figures belie large changes at Korean Air's core business as China sees large gains and Japan large decreases. Traffic is returning from Europe while the Americas show weaker point of sale, possibly due to SkyTeam colleague Delta Air Lines making international commercial changes to bring Korean Air to the negotiating table for a partnership.

Encouraging momentum in 1Q2014 has slowed in 2Q2014 as costs no longer show the sharp decreases of 1Q2014. Korean Air will scale back in Japan while growing in China and the Americas. China growth however is not to prized destinations while Americas growth may hinge on Delta's cooperative spirit - or not. LCC competition, already strong in the domestic market, will continue with more foreign LCCs entering. Korean Air is seeking a larger profile for its LCC subsidiary, Jin Air, by deploying widebody aircraft to short and long-haul points. The pre-emptive move may be short lived as Asiana would like to establish a new Seoul-based LCC if existing LCC Air Busan agrees.